Yesterday (February 22), Co-operative’s lending arm Platform temporarily withdrew its five-year fixed rate of 3.75 per cent.
The lender told FTAdviser it needed to prioritise existing applications, but intends to reintroduce products at the earliest opportunity.
We wouldn’t be surprised to see some of the best available rates in the market disappear and not necessarily be replaced by another lender.Chris Sykes, Private Finance
Platform still has five-year fixes starting from 3.85 per cent with a £1,499 fee.
Meanwhile, Virgin Money also increased its headline rate this week by 0.05 percentage points, to 3.99 per cent.
Director at Private Finance, Chris Sykes, told FTAdviser while he does expect to see further reductions driving average fixed rates down, he does expect some headline rates to disappear and not return or be replaced for the time being.
“Current market leading rates are popular and could almost be argued as too competitive at the moment, although it does depend on how the lender is funded and targeted,” said Sykes.
“We have seen some headline mortgage rates start to increase, especially those with fixed rates below current swap rates.
“We wouldn’t be surprised to see some of the best available rates in the market disappear and not necessarily be replaced by another lender.”
With a smaller pool of borrowers to pick from this year as UK Finance anticipates a 15 per cent drop in mortgage lending, banks and building societies have been trying to compete with lower rates to win more business.
Sykes explained that typically larger lenders are equipped with more resources to deal with high demand as seen over the past two years.
Last year, a number of smaller lenders had to step out of the market for weeks at a time to work through application black logs.
Following rock bottom rates in 2021, 2022 saw rates climb as the Bank of England notched up the base rate and a rapidly changing interest rate environment ensued which made it hard for lenders to price products.
Since the "mini" Budget in the autumn of last year, mortgage interest rates have increased at a faster rate. But by December, many lenders were reducing their rates again.
Swap rates ‘on march up’
Director at Harmony Financial Services, Imran Hussain, said swap rates, a leading indicator for mortgage rates, have been “bouncing around” of late.
